Thursday, June 29, 2006

You requested clarification concerning the provisions in 2006 Senate Bill 404 providing a new sales tax exemption, effective July 1, 2006, for public libraries on their sales of tangible personal property, which will be codified at new subparagraph (ooo) of K.S.A. 79-3606.

You ask what libraries are covered within the exemption, and in particular whether the exemption would include public academic libraries which also serve the general public and are supported in whole or in part with tax money, and for which there are not-for-profit organizations whose purpose is to raise funds for or provide services or other benefits for those same academic libraries. The libraries described above appear to fit within the new exemption.

You also ask what tangible personal property is included in the exemption. Sales of tangible personal property by public libraries or not-for-profit organizations whose purpose is to raise funds for such libraries are included in the exemption. This would cover not only sales of books and other library reading material but also pencils, paper, coffee cups and book bags.

You further ask about the types of sales and number of sales covered by the new exemption. The new exemption places no limitations on the number of sales. It would include public library book sales, whether sponsored by the public library or a library friends group, regardless of how many sales took place within a year. It would exempt proceeds from the sale of library books and related material from an ongoing sale in a shop/cafe or in "booktiques," as long as the sale is made by a public library or not-for-profit organization whose purpose is to raise funds for or provide services or other benefits to such public library, such as a library friends group.

Finally, you ask whether the library must secure 501(c)(3) status in order to claim the exemption. The statutory language requires that library must serve the general public and must be supported all or in part by tax dollars, in order to qualify for the exemption on its sales of tangible personal property. It does not require that the library obtain 501(c)(3) status. However, in order for sales on behalf of a public library to qualify for the exemption, the organization conducting the sale must be able to verify its not-for-profit status and show that its purpose is to raise funds for the public library or to provide services or other benefits to the public library. Status as a 501(c)(3) organization for those purposes would provide such verification for the not-for-profit organization.

I trust this addresses the questions you raised. Please let me know if you have additional questions.